‘The World Has Changed and So Must We,’ Community Foundations Find

Interest in impact investing is growing more rapidly among community foundations than any other foundation group, reports Peter Berliner of Mission Investors Exchange. In the most comprehensive example of this, Incourage Community Foundation of Wisconsin Rapids, WI, this year made a new commitment to invest 100 percent of its resources for mission. Everything the foundation does—grants, investments, vendor relations, and hiring—will be re-examined with a mission lens toward a vision of helping to create a community that works for all.

Notably, the recent move by Incourage includes a commitment to invest all its financial assets for mission, making it the first community foundation to take such a pledge. Yet, its commitment goes beyond that. The foundation is an exemplar of how community foundations around the nation are beginning to adopt a new anchor mission:deploying all their resources—financial, human, social, intellectual—to build community wealth. This mission encompasses the use of many tools, from grants and convening to investing, to help build a locally rooted economy that is both inclusive and sustainable.

As a manifestation of this commitment, the Incourage Community Foundation worked with others to purchase the abandoned Tribune Building in Wisconsin Rapids, and engaged the community in planning for its reuse. Residents decided on a microbrewery, a culinary kitchen to incubate startup businesses, and a local café serving local food. “It’s a community incubator that is helping advance a new economy,” said Incourage President, Kelly Ryan.

This is just one example of innovative community foundation work among many examples cited in a new report, “A New Anchor Mission for a New Century: Community Foundations Deploying All Resources to Build Community Wealth,” published recently by The Democracy Collaborative of Takoma Park, MD. The report celebrates the 100th anniversary of the community foundation field; the first such foundation, the Cleveland Foundation, was created in 1914. Looking at how one group of community foundations are remaking themselves for a new century, report authors Marjorie Kelly and Violeta Duncan researched an “Innovative 30” community foundations taking up elements of a new anchor mission of building community wealth. Among the report’s examples:

The Cleveland Foundation catalyzed the creation of three employee-owned Evergreen Cooperatives, including Evergreen Energy Solutions, a solar installation and energy solutions company launched, in large part, with the support of large contracts from local anchor institutions. The three cooperatives employ workers drawn from Cleveland’s inner city neighborhoods, where unemployment exceeds 25 percent and median household income is under $18,500 a year. Inspired by this model, a number of other community foundations have begun adapting this approach for their own communities.

Vermont Community Foundation, based in Middlebury, VT, for the last decade has had a policy of devoting five percent of all assets – including donor advised funds – for investments that benefit Vermont. And through its Food and Farm Initiative, the foundation has deployed many other resources to build community wealth in the food and agriculture sector. The foundation supported legislation that created the Farm to Plate Initiative and funded the Initiative’s ten-year plan to increase economic development. It also helped launch the Vermont Farm to School Network, which seeks to create local food-buying programs at all Vermont schools by 2020.

Community foundations are today at a tipping point, observed Ronn Richard, president of the Cleveland Foundation. “Our field’s next century will be radically different from the first,” he is quoted as saying. Community foundations are facing growing competition from an emerging group of national donor advised funds, many of which are affiliated with commercial institutions such as Fidelity, Schwab, Vanguard, Citibank, and Goldman Sachs. Donor advised fund (DAF) assets at those institutions now surpass the DAF assets at community foundations, according to The Democracy Collaborative report. At the same time, communities are facing unprecedented economic distress, with real wages having increased only a trivial amount over 30 years, and with nearly 50 million Americans in poverty, a greater proportion of the population than in the late 1960s.

As Clara Miller of the F.B. Heron Foundation has said, “The world has changed, and so must we.” Most philanthropic approaches were designed for a world where there was a healthy mainstream economy, with a small group in poverty on the margin. But that picture is no longer accurate, Miller said, because poverty is now structural, not marginal. “The urgency and size of the problems we face require that we work differently,” Miller has written. “Everything at our disposal is now a mission-critical resource.”

It is these converging challenges – economic stagnation plus a shifting competitive landscape – that are leading many community foundations to shift and deepen how they work. Some of the best are taking on the new mission of building community wealth as their response. In the process they are adopting new approaches, non-traditional for community foundations, in economic development and impact investing. The “Innovative 30” profiled in the new report, “A New Anchor Mission for a New Century,” are both large and small, both urban and rural, and are found across the U.S.